Are you located in Louisiana and are over 120 days late on your mortgage payments? This guide will help you understand the Louisiana foreclosure process and your rights as a homeowner.
When You Miss Mortgage Payments in Louisiana
When getting a mortgage in Louisiana, you will typically sign a promissory note and a mortgage. The first is your agreement to pay a debt and the second is what provides the lender an interest in the property if you do not pay the mortgage.
Both parties must agree to the confession of judgment whereby the homeowner accepts responsibility for judgment against themselves. In this case, failing to make payments to clear the bill means the lender will have the right to seize and sell your home in a foreclosure sale so they can recover their losses on the property.
Grace Period For A Mortgage In Louisiana
Most mortgage loans in the United States have a grace period. If your mortgage payment is due on March 1, you may have until March 10 to get the balance you owe to the bank. The bank may impose a late fee if you make your payment after that date.
Once you miss a few payments you will begin to receive collection letters or calls. At this point, you have some time to work with the lender to avoid foreclosure. If no agreement is made, the next step is the foreclosure process.
The Basics On Foreclosures In Louisiana
Real estate laws in Louisiana mandates that the lender must send a breach letter when the borrower is late on payments. If the past debt isn’t cleared or payment arrangements are not made, the lender can move into the foreclosure process. Under the Dodd-Frank Act, mortgage providers cannot foreclose on your home unless you are at least 120 days past due.
A Quick Solution: Loss Mitigation Application
According to the local Louisiana law, a borrower can submit a “loss mitigation application” to request a halt to foreclosure proceedings to provide you, the borrower, with time to talk with the lender (La. Code Civ. Proc. Ann. art. 2634, 2638). You need to attach bank statements with your application.
From there, the loan provider will assess your qualifications. If approved, you must adhere to the various terms outlined by the provider. Conversely, you can reject the loss of mitigation if the lender offers unfavorable terms.
The foreclosure won’t stop until you agree to the terms. If you accept the plan and violate the terms, however, the foreclosure will continue.
How A Louisiana Foreclosure Proceeding Works
There are two types of foreclosure action in Louisiana which are the executory and judicial processes. While both go through the court system, the executory process is faster and more common. Judicial foreclosures are more common in certain parts of the state including New Orleans, Baton Rouge, and the surrounding areas.
Executory Louisiana Foreclosures
Under this proceeding, the state law states that the lender can receive an automatic judgment and order your property as a seizure and sale with an immediate request to foreclose according to the Louisiana Code of Civil Procedure.
It’s more than likely that you already agreed to an executory process when you signed the mortgage papers.
Notice of Seizure
All Louisiana foreclosures will occur once you receive this document. Under La. Code Civ. Proc. Ann. art. 2721, the court will issue a notice of seizure where the sheriff will ensure to take the property. In this document, you’ll receive options to avoid foreclosure such as free housing counseling.
Notice of Sale
Three days following the notice of seizure, the sheriff will also publish the notice of sale multiple times (La. Code Civ. Proc. Ann. 2331,2722). All foreclosure sales are considered a public auction. Buyers won’t have access to getting any inspections done and the house must be paid in cash.
Judicial Foreclosures in Louisiana
The lender must file a lawsuit against the property owner. If you fail to answer the summons, the court will rule against you with a default judgment. If you do answer the summons, the case will go through the litigation process. If you fail to prove your case, the court will enter a judgment that will allow the bank to hold a foreclosure sale to pay the loan.
However, you can fight back via the following options:
- Appealing the court’s decision
- Filing a countersuit and asking the court to stop the foreclosure
Sheriff Involvement in Foreclosures in Louisiana
Regardless of the foreclosure type, a sheriff will issue a writ of seizure if the court rules against you. He/she will give the notice to the homeowner or the homeowner’s attorney.
They may also leave the writ of seizure with an adult who lives on the property. Overall, there are very few protections for homeowners who receive this document.
Know Your Homeowner Options in the State of Louisiana
Review the solutions available to you to see if you can find a way out of foreclosure. The notice will outline the steps needed to complete a loss of mitigation application. It will also give a timeframe in which you can catch up on the payments. The notice will also convey your right to get an attorney.
Legal Services If You Can’t Afford Attorneys In Foreclosure Law
If you cannot afford attorneys to help with foreclosure, the notice will reveal how you can get free legal services on topics such as what judgment you could use, paperwork, loan modification, and more if you qualify according to the local law.
After serving the papers, the sheriff must wait three days before publishing two notices in the local papers. It may seem too late at this point, but you can still stop the process. You can contact them and pay the judgment, including interest and costs associated with the sale.
The Sheriff’s Role In A Foreclosure Proceeding
If you cannot pay, the sheriff will preside over the sale in Louisiana, and any buyer who answers the ad or listings can bid on the property.
Alternatively, they will organize an auction. The bidder must pay cash on the same day. In some instances, the buyer can pay within 30 days if they pledge a 10-percent deposit. After the sale, the deed will be given to the new buyer.
What To Do After Being Served
If a sheriff comes knocking, don’t panic. Firstly, the process may be delayed if they cannot successfully serve you the notice according to foreclosure laws.
It takes between 60 to 90 days to sell a foreclosed home. During this period, you can hire a foreclosure attorney and establish a plan going forward. This should be your default action.
Don’t utilize the services of a general practice attorney. Instead, opt for attorneys who specialize in foreclosure laws. You do not want to put the fate of your house in the hands of people who are not familiar with Louisiana foreclosure laws.
Foreclosure eviction can be a lengthy and complicated process. Attorneys and foreclosure lawyers can help you file paperwork, review statutes, and craft a strong defense in court.
Mortgage Company Regulations in the Louisiana State
Depending on the lender’s practices, you may not see a sheriff approaching your door yet. A foreclosure proceeding will only proceed at the discretion of the lender.
The provider may wait for a certain period before they start the process, which can be months or years. Use the time to improve your finances to show the provider that you improved your financial profile, and they may be willing to grant you a payment plan. Making a lump sum payment may be enough to avoid foreclosure.
Contact Your Home Loan Provider to Prevent Court Orders and Law Issues
There are ways to prevent foreclosure from happening. Mortgage lenders are usually hesitant to begin foreclosures because they must maintain the property until it’s sold. They don’t want the foreclosure sale or the deficiency judgment, they want you to pay the loan. Hence, you may negotiate an agreement with them.
To avoid a bad outcome such as a home sale, contact the provider and explain your situation about why you haven’t been able to pay the mortgage. They may have some solutions for you, such as:
- Forbearance: The lender will reduce or suspend the loan owner payments temporarily. You would have to make an upfront payment of a fixed amount when the period ends. They could also agree to an arrangement to pay over time and a fixed amount
- Refinance: Some entities may approve a refinance. It can get you a good interest rate so you will pay a lower amount. They could also modify the mortgage loan to prevent the proceeding from taking place.
- Repayment Plan: A mortgage company may allow you to pay a little extra every month to catch up.
- Short Sale: You’ll be required to sell your home at a price that is lower than the amount of mortgage loan or debt that you owe.
No state law gives Louisiana homeowners the right to catch up on their late payment. However, this could prevent the bank from filing a foreclosure petition and taking the case to the courts.
Deficiency Judgments to Protect A Mortgage Borrower
If the lender cannot recover the full amount of the mortgage that you owe, they can file a separate lawsuit against you called a deficiency judgment. This occurs when the proceeds of the foreclosure sale cannot recoup the losses of the debt.
The state of Louisiana will allow the bank to obtain a personal judgment document to get the difference between the foreclosure sale price and the total debt from the borrower. This is otherwise known as a deficiency judgment (La. Code Civ. Proc. Ann. art. 2771, 2723).
A deficiency judgment cannot be obtained unless they appraise the value of the property before the sale. If they take legal action and win, according to the law, they can collect on it in a variety of ways including garnishing of wages or placing a levy on your bank account.
Foreclosure Attorneys To Stop Louisiana Foreclosures
Hiring a foreclosure attorney specialized in Louisiana law can be a good option to protect your rights and stop a foreclosure. Make sure the attorney has legal experience in your area. You also need to be open and honest about your situation to determine the best strategy to protect your rights.
A foreclosure attorney will advise whether you have a strong case that you can win if you file a lawsuit in court, or whether the best option is to let the property be foreclosed on. With an attorney, you can navigate the issue carefully and avoid any errors in a document or the process that could cost you the case.
Attorneys often have a better understanding of the Louisiana Revised Statutes, so they can help you review any documents you receive and fight court orders in case they take place. This can mean your house will not go on auction when you default on a mortgage payment. You have legal recourse according to Louisiana foreclosure laws.
In the event that lenders are seeking to file deficiency judgments against you, seek help from an attorney in Louisiana to protect your rights according to the law. As a borrower, you can often work out an alternative arrangement with the lender and prevent an immediate sale.
However, if negotiations with your lender have failed but your house has not yet been foreclosed, you could sell your house to pay your lender and avoid foreclosure.